Is long-term care insurance for you?
After my recent story about the cost of nursing homes, many readers wanted to know what I thought about buying long-term care insurance.
It's not an easy question to answer, but one thing's for sure: Everyone will have to confront how to pay for their care when they get old and frail.
Generally, Medicare doesn't pay for long-term care. Medicare only pays for skilled nursing facilities or home health care when your stay is medically necessary. And you must meet strict conditions for Medicare to pay for these types of care.
Before deciding whether to buy a long-term care insurance policy, look at your family's health history, your age, your health status, overall retirement goals, income and assets.
“Do you have a family tendency toward heart disease, cancer, stroke, diabetes, high blood pressure or dementia?” said Tom Murphy, a certified financial planner at Murphy & Sylvest LLC in Dallas.
If care is needed, do you have enough money to pay the additional expenses? If you're married, do you have enough to pay them while allowing your spouse to maintain his or her standard of living?
“Generally, for the poor or the folks on the lower end of the spectrum, (a long-term care policy) may not make sense because Medicaid provides coverage for nursing homes,” said Stephen Keller, manager of compensation and benefits at Grant Thornton LLP. “For wealthy folks — say, with $5 million or over of investable assets — they can self-fund this without any problem, but you do need liquid assets for that.”
It's consumers in the middle who may benefit from long-term care insurance, he said.
“In that middle band, which is a wide swath of the population, (insurance companies) can make a strong case that this makes sense,” Keller said.
Long-term care insurance isn't cheap, though.
A 55-year-old single individual purchasing long-term care insurance can expect to pay an average of $2,065 a year for $162,000 of current benefits, which will grow to roughly $330,000 of coverage at age 80, according to the American Association for Long-Term Care Insurance, up 20 percent from 2012.
“Persistent low interest rates and yields on fixed-income investments continue to push costs for various insurance products higher,” said Jesse Slome, the association's executive director.
“If the long-term care insurance premium itself is so high as to cause you to be unable to pay for food, medicine or other essential items, then you cannot afford the policy and should plan to qualify for Medicaid in the event of a long-term care need,” Murphy said. “If you can afford to pay the premium and still maintain your desired standard of living, then purchasing the policy is most likely a good idea.”
You age is a factor at the time of purchase.
“If you're over 60, it's going to be a lot more expensive and harder to qualify for a policy, particularly if there are any chronic conditions,” said Mandy Walker, a senior editor at Consumer Reports magazine.
Pamela Yip is a personal finance columnist for the Dallas Morning News. Readers may send her email at firstname.lastname@example.org; she cannot make individual replies.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- If you get this letter from the IRS, it’s legitimate
- Home appraisal is below sales price — now what?
- Venting online about job protected
- Falling demand for steel not likely to reverse any time soon
- Increased credit card use reflects confidence, flat wages
- Canadian company centers its Marcellus push in Southpointe
- Corporate missteps hurt reputations, profits, sometimes in long run
- Stafford: Hirers bemoan wasted time with some applicants
- Farmers fund research on gluten-free wheat
- Stop foreign dumping, U.S. Steel CEO Longhi tells Congress
- Pa. Gas & Electric agrees to $6.8 million settlement of polar vortex claims